Forecasting China's Economic Growth and Inflation

Patrick Higgins, Tao Zha and Karen Zhong

No 2016-7, FRB Atlanta Working Paper from Federal Reserve Bank of Atlanta

Abstract: Although macroeconomic forecasting forms an integral part of the policymaking process, there has been a serious lack of rigorous and systematic research in the evaluation of out-of-sample model-based forecasts of China's real gross domestic product (GDP) growth and consumer price index inflation. This paper fills this research gap by providing a replicable forecasting model that beats a host of other competing models when measured by root mean square errors, especially over long-run forecast horizons. The model is shown to be capable of predicting turning points and usable for policy analysis under different scenarios. It predicts that China's future GDP growth will be of an L-shape rather than a U-shape.

Keywords: out of sample; policy projections; scenario analyses; probability bands; density forecasts; random walk; Bayesian priors (search for similar items in EconPapers)
JEL-codes: C53 E10 E40 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2016-07-01
New Economics Papers: this item is included in nep-cna, nep-for, nep-mac and nep-tra
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Citations: View citations in EconPapers (12)

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Journal Article: Forecasting China's economic growth and inflation (2016)
Working Paper: Forecasting China's Economic Growth and Inflation (2016)
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